If you have a high-level business degree and your career consists of making high-pressure presentations in front of billionaire investment fund managers, you can’t just go in with a bunch of mushy, feelings-based arguments. Even stuff that seems relatively obvious needs to get turned into numbers. (Billionaire investment fund managers love when things are quantified; 93% of them just go gaga for a good stat.) What's more, those numbers need to have impressive sounding names...like "the profitability index."
However, in this case, the index itself is relatively straightforward. The profitability index suggests how profitable a particular investment will be. It presents the figure as a ratio of between the present value of future cash flows and the amount needed for investment.
So...if a project costs $10 million, but will produce a cash flow with a net present value of $15 million, it has a profitability index of 1.5. The higher the index, the more profitable the project.
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Finance: What is a profit center?2 Views
Finance a la shmoop what is a profit center? well here's a profit center and
here's a profit center yeah Google search is where Google makes like a [Google search of profits appear]
hundred forty-two percent of its profits so search for Google is its profit
center in fact if it weren't for its search engine well Google would actually
be losing money YouTube loses a billion dollars a year
depending on how you do the math Google Maps loses 100 million or so everything
else loses a few billion a year and search makes thirty billion dollars a
year annually yeah per year that's what it means
so more than makes up for everything else that's its profit Center and
without that profit center generating profits or cash to fund all these other [Man playing guitar with VR]
wacky ideas the driverless cars our favorite while Google would just be
searching for a way to make money but it doesn't it found it it's called search...
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